Question

On January 1, you deposited $7,300 in an investment account. The account will earn 8 percent annual compound interest, which will be added to the fund balance at the end of each year (Future Value of S1, Present Value of $1. Future Value Annuity of $1. Present Value Annuity of 5) (Use appropriate factor(s) from the tables provided.) 333 points Required: 1 What will be the balance in the account at the end of 10 years? 2. What is the interest for the 10 years? 3. How much interest revenue did the fund earn in the first year the second year? Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Required 3 What will be the balance in the account at the end of 10 years? (Round "Future Value to nearest whole dollar amount.) Table or Calculator Function: Present Value: Future Value Required 2 >

Answer 1

(1)

balance at the end of 10 years = future value of the investment

= $7300 x FVF(8%, 10)

= $7300 x 2.15892

= $15760

where,

FVF(8%, 10) = 2.15892

(2)

interest for the 10 years = $15760 - $7300 = $8460

(3)

for the first year,

interest revenue = $7300 x 8% = $584

for the second year,

Interest revenue = ($7300 + $584) x 8% = 630.72 or $631